Wallis v. Pan American Petroleum Corp., 384 U.S. 63 (1966)

Wallis v. Pan American Petroleum Corp.

No. 341

Argued February 23-24, 1966
Decided April 25, 1966
384 U.S. 63

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

Petitioner, in 1954, filed with the Secretary of the Interior under the Mineral Leasing Act for Acquired Lands applications for a lease to exploit oil and gas deposits in several federal tracts near Burrwood, Louisiana. He thereafter agreed to give respondent McKenna a one-third interest in those applications and any lease issued thereunder. Petitioner later sold respondent corporation an option to acquire any lease which he might obtain under those applications. Fearing that the tracts might prove to be public domain lands, petitioner filed new applications in 1956 for the same tracts under the Mineral Leasing Act of 1920, under which, in 1958, the Secretary issued a lease. The respondents thereafter brought diversity actions in the Federal District Court on their respective agreements with petitioner, and the actions were consolidated. The court held for petitioner, ruling on the basis of Louisiana law, which it found controlling, that a mineral lease contract would be effected only by written agreement, and that the written agreements covered only leases obtained under the Mineral Leasing Act for Acquired Lands. The Court of Appeals reversed and remanded on the ground that federal, rather than state, law governs these claims to leases on public domain land.

Held: state law, which generally controls the dealings of private parties in an oil and gas lease validly issued under the Mineral Leasing Act of 1920, governs the controversy in this case. Pp. 67-72.

(a) Normally, a significant conflict between a federal interest and the use of state law must exist to warrant fashioning a rule of federal common law.

(b) There is no significant threat to any identifiable federal policy or interest in this case. P. 68.

(c) No expression of policy or provision of the mineral Leasing Act of 1920 is inconsistent with state law relied on in this case. Pp. 69-71.

(d) Since the requirements of Louisiana law for mineral lease transactions are not unreasonable, there is no need to resort to federal law. Pp. 69-70.

(e) The Act’s provisions curtailing alien ownership of leases thereunder and imposing maximum acreage limitations are not inconsistent with application of state law. P. 70.

(f) State law has not been shown to be inadequate to protect whatever federal interest exists in the resolution of disputes over leases to federal lands. P. 71.

(g) Irvine v. Marshall, 20 How. 558, distinguished. Pp. 71-72.

344 F.2d 432, 439, vacated and remanded.